Anthony Holmes thought he had struck gold when he joined the thousands of Americans flocking to Florida during the pandemic. In 2021, Holmes left Virginia, buying a five-bedroom home in a gated Tampa community for $550,000. After investing another $50,000 in upgrades, he was sure he'd made a sound financial decision.
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Fast forward to today and Holmes cannot sell his house. "I can't unload the thing," Holmes told The Wall Street Journal. "In eight months, I've had zero offers. No one even showed up to the open houses." He’s still stuck with it despite dropping the listing price from $620,000 to $583,900.
It's not just Holmes feeling the squeeze. Across Florida, once-booming housing markets have slowed down dramatically. Parcl Labs reports a 50% increase in housing inventory in cities like Tampa and Orlando, while demand has dropped by at least 10%. Many sellers are slashing prices, with more than half Tampa's homes on the market seeing reductions.
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This is due to a potent mix of skyrocketing mortgage rates, surging insurance premiums and the looming threat of hurricanes. Just two weeks ago, Hurricane Helene caused significant damage on Florida's Western coast. Now, Hurricane Milton is on its way, expected to hit this Wednesday. Florida Gov. Ron DeSantis has already declared a state of emergency, urging residents to prepare for potential evacuations.
The rise in hurricane activity has been the final straw for many Florida homeowners struggling with soaring insurance costs. In some areas, premiums have increased by up to 400%, making Florida one of the most expensive states for home insurance.
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According to the Insurance Information Institute, insurers pass on the costs of frequent natural disasters to homeowners. Holmes, who used to pay $1,700 annually for coverage, now pays more than double after his previous insurer dropped him following Hurricane Idalia.
A state once buzzing with eager buyers now has desperate sellers. Real estate analysts, like Brad O'Connor from Florida Realtors, warn that the market is heading for a significant housing correction.
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"With the surplus of homes on the market, we could see some price deterioration in certain areas," he shared with The Wall Street Journal. Even Florida's once-thriving condo market has taken a hit.
After the tragic 2021 Surfside condo collapse, Florida introduced stricter building inspection laws, forcing older condos to undergo costly structural repairs. These costs, sometimes reaching hundreds of thousands of dollars, are often passed on to condo owners through special assessments.
For example, at the Cricket Club condominium in North Miami, two-bedroom units that used to sell for $450,000 or more are now going for as low as $200,000. The big drop comes after residents were slapped with a $134,000 assessment to pay for essential repairs.
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Investors, too, are pulling back. Institutional investors, who once bought Florida homes in bulk, are now offloading their properties.
According to Wolf Street, nearly 5% of home listings in Tampa, Orlando and Jacksonville come from institutional sellers hoping to cash out before the market worsens. Jason Lewris, co-founder of Parcl Labs, warns, "When institutional investors exit a market, it can be very quick. It could have a cascading effect on home prices."
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Despite the grim outlook in much of Florida, some areas, like Miami, remain resilient. An influx of wealthy buyers, many paying in cash, has helped stabilize the market. However, the future seems less certain for homeowners like Holmes in northern Florida.
With another hurricane approaching and no offers on the horizon, Holmes hopes to break even. "I have no doubt that a combination of high prices, high mortgage rates and high insurance has just totally collapsed the market," he said.
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This article Florida's Housing Market Faces Major Setback As High Insurance Costs And Storm Concerns Drive Buyers Away, Leaving Homeowners Stuck originally appeared on Benzinga.com
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